Revenue investigates hedge fund managers

The probe will rake over the affairs of some of the highest earners in the UK. It is being carried out by the Revenue's special compliance office, which has far-reaching powers to seize private documents.

The initiative has been triggered by growing concern at the Revenue about the vast profits earned by some hedge funds and the huge personal incomes of individual managers, according to a report to be published next week in Hedge Funds Review.

The industry, which has grown explosively into a $500bn business with 6,000 funds, is notoriously secretive, with many funds run by private partnerships of managers.